Senate prepares for House’s $29.1B GOP budget plan

By Marc LevyAssociated Press

June 25, 2014

Shown is the Capitol building in Harrisburg.

HARRISBURG – A $29.1 billion Republican-penned budget plan that makes higher payments to public schools, human services and public pension funds passed late Wednesday but was headed for certain changes in the Senate as the new fiscal year closed in and Democrats accused Republicans of assembling an irresponsible budget.

The bill, made public barely two days ago, passed, 110-93, with one Republican joining every Democrat to oppose it. Five days are left in the fiscal year, and senators seemed likely to have their own ideas about where to find the revenues, particularly because the House plan relies on $380 million from the unlikely sell-off of the state’s wine and liquor operations.

The plan does not raise broad-based taxes, but leans heavily on one-time moves to tap special off-budget program funds, some of which are likely to be erased in the Senate. Democrats counted up $2 billion in one-time maneuvers to balance rising costs and help make up for a massive and unexpected shortfall in tax collections.

In a statement Wednesday night, Senate Majority Leader Dominic Pileggi, R-Delaware, promised prompt Senate committee action on the bill Thursday and said he will “continue pushing for a sustainable, responsible state budget.”

Senate Minority Leader Jay Costa, D-Allegheny, said the House plan was built on “smoke and mirrors,” and predicted a Senate bill could rely on higher taxes on cigarettes and the booming natural gas industry, plus rollbacks of planned business tax breaks kept intact by the House.

In the House, debate was highly partisan.

House Majority Leader Mike Turzai, R-Allegheny, called the plan “an exceptionally responsible budget” that does not increase taxes while House Minority Leader Frank Dermody, D-Allegheny, tied the deficit and suffering public schools to a “failure of leadership” under Gov. Tom Corbett and his fellow Republicans who control the Legislature.

The pressure is on for the state to erase its operating deficits and deal with its pension debt: credit rating agency Standard & Poor’s has warned that it could downgrade Pennsylvania’s rating in the coming months if it does not see significant strides to structurally balance the budget and address long-term pension liabilities.

Overall, the House plan would increase spending by about $727 million, or almost 2.6 percent, over the current year’s approved budget. The increase is deceptively small: More than $200 million in additional spending would occur without being reflected in the plan, according to Democrats.

The biggest task for Republicans was to paper over a massive and unexpected revenue shortfall that helped tear a projected $1.7 billion hole in the $29.4 billion plan that Corbett had proposed.

To help fill the gap, the House pared back Corbett’s plan by about $300 million, tapped hundreds of millions of dollars in cash from off-budget programs and counted on $380 million from the sale of retail and wholesale liquor licenses, even though any such measure to sell licenses is essentially dead in the Legislature. Republicans rejected Democrats’ appeals to expand Medicaid eligibility under the 2010 federal health care law as a way to save hundreds of millions of dollars.

Meanwhile, the Republican plan asks state agencies to squeeze their operating budgets to absorb higher public employee pension costs, although Democrats say Republicans did not fully account for the cost of pension obligations under a 2010 law.

Some of Corbett’s priorities are included in the House plan. It met hospitals’ requests for aid for the poor and uninsured they treat, it makes the first increase for special education funding in seven years and it adds tens of millions more to help the intellectually and physically disabled.

Public schools would see an extra $100 million, including $70 million for instruction and operations, $20 million for special education and $10 million for school construction projects. But the new, $340 million “Ready to Learn” block grant program proposed by Corbett in his February budget plan was jettisoned from the House budget.

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